The tl;dr version: 1) Cost living of depends on how one lives (duh), so explanation below*, 2) Many costs are steady across the last 5 years, except 3) Spikes are explained, 4) I’m living within my means, 5) Making this public motivates me to do it right. Glad I did. This year I realized I hadn’t recorded half of the health insurance payments for 2016, and 6) I like playing with spreadsheets.
*Actually, here is the long explanation from 2015. How spending has differed since then is described below the table.
Travel increased both in duration and cost per day in ’16 and ’17 because I wanted to, I could, and I’m not getting any younger.
US income taxes dropped because I didn’t follow the same Roth IRA conversion strategy used in ’15 and ’16. Wanted to see what could happen to income taxes in ’18. That paid off. In ’17 converted half the previous years amount so the taxes wouldn’t matter much.
I changed format from previous cost of living posts, separating medical care and medical insurance costs for the last five years. Medical care costs jumped in 2016. Six months of post heart attack meds and follow-up testing will do that. 2017 added a Cardiac MRI, 2 pairs eyeglass lenses, removal of a broad, deep, black, benign mole, and treatment of a grade II sprained ankle.
Eating out spending dropped for the same reason eating at home increased: to cut down on the palm oil and coconut milk in my diet.
My concept of ‘cost of living’ changed while doing this usual year end financial review. I’ve lived off my taxable (non-IRA) account through ’16. Spending was cost of living.
Since retiring, the only withdrawals from my IRA were conversions from Traditional IRA to Roth IRA in ’15, ’16 and ’17. That’s not spending.
Next year IRA withdrawals will be to fund the accounts from which I spend. Going forward, managing how much is left in the IRA will be the most important part of my finances. I think I’ll call the withdrawals Cost of Retirement. Spending minus Social Security will be my Cost of Living.